Loss-making firms face exclusion from 40% tax rebate

KPMG warns that unprofitable firms will face immediate relief gaps under the new Year of Assessment.

Singapore’s 40% corporate income tax rebate for the Year of Assessment (YA) 2026 is expected to ease cost pressures for some firms but leave companies with weak cash flow and loss-making businesses needing other forms of support, according to analysts.

The rebate will ease the tax burden and benefit small and medium-sized (SME) enterprises, though firms that are not profitable would not see immediate relief, said KPMG Singapore head of tax Ajay Kumar Sanganeria.

“These firms will need to rely on other assistance schemes for support,” he added.

Meanwhile, Sanganeria highlighted other growth-oriented measures along with the rebate, such as stronger support for overseas expansion and a $1.5b fund to attract high-quality listings to the Singapore Exchange.

These proposals are meant to prepare companies for long-term growth in a more uncertain environment, he added.

The rebate—slightly lower than last year’s rate—shows the government moving away from broad support and focusing on more targeted measures, according to Deloitte Singapore real estate tax leader Chai Sook Peng.

The move maintains fiscal prudence and long-term budget sustainability, Chai said. “This also provides short-term relief to some businesses, especially for those facing cost pressures.”

Meanwhile, Forvis Mazars partner Chan Xue Pei said that the Budget 2026 support is calibrated and conditional, as it recognises the cost pressures businesses face.

“The 40% corporate income tax rebate for YA 2026, capped at $30,000, with a minimum benefit for active companies employing at least one local employee, provides cashflow relief while reinforcing employment objectives,” Chan said. “It rewards operating businesses with substance.”

The budget’s SME and household measures should also help stabilise operating conditions and reduce credit risks, according to a Bloomberg Intelligence report.

The rebate, though more modest than last year’s 50%, along with higher wage co-funding, is expected to ease rising cost pressures for Singapore’s 355,000 SMEs. New small-business support measures could also support growth prospects for the country’s five digital banks.

“Green Link, owned by Greenland Group and Linklogis, has been positioned as the closest to breakeven amongst peers and could benefit from the 40% corporate income tax rebate in the 2026 assessment year, though capped at S$30,000,” Bloomberg noted.